IDEAS home Printed from https://ideas.repec.org/a/gam/jrisks/v13y2025i4p68-d1625516.html
   My bibliography  Save this article

Nonlinear Nexus Between ESG Scores and Corporate Performance of Insurance Companies in the MENAT Region: Moderating the Effect of Institutional Quality

Author

Listed:
  • Rewayda Tobar

    (Insurance and Risk Management Department, University of Business and Technology, Jeddah 23435, Saudi Arabia
    Faculty of Commerce, Cairo University, Cairo 12613, Egypt)

Abstract

Although the relationship between ESG performance and firm performance has been the subject of several studies, the nonlinear relationship between ESG performance and the corporate performance of insurance companies remains less explored, specifically in the Middle East, North Africa, and Turkey (MENAT) region. Moreover, the moderating effect of institutional quality on this relationship has not been examined. To fill this gap, this paper investigates the nonlinear impact of ESG performance on the financial performance of insurance companies in the MENAT region, as well as the moderating effect of institutional quality. To achieve this, a sample of 31 insurance companies located in the seven MENAT countries was constructed over the period 2017–2022. The sample was selected based on the completeness and availability of ESG-related data. This ensured a standardized dataset to enhance the reliability of the results. To estimate this relationship, the System Generalized Method of Moments (SGMM) was used. This technique was used to address endogeneity issues. The empirical results indicate that the performance of the insurance companies is better for those with better ESG performance. Moreover, the quality of institutions is an even more important factor in enhancing the ESG practices–corporate performance nexus. More in-depth analysis is needed to show how these various relationships might be altered with ESG criteria. The findings of this research would, therefore, be beneficial to insurers in terms of an increased understanding of how effective integration of ESG practices, both at the institutional and company level, could be streamlined to enhance their long-term competitiveness and profitability.

Suggested Citation

  • Rewayda Tobar, 2025. "Nonlinear Nexus Between ESG Scores and Corporate Performance of Insurance Companies in the MENAT Region: Moderating the Effect of Institutional Quality," Risks, MDPI, vol. 13(4), pages 1-21, April.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:4:p:68-:d:1625516
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-9091/13/4/68/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-9091/13/4/68/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wang, Jianling & Ma, Jia & Li, Xiuling & Wang, Chen, 2025. "Nonlinear impact of economic policy uncertainty on corporate ESG performance: Regional, industrial and managerial perspectives," International Review of Financial Analysis, Elsevier, vol. 97(C).
    2. Heinkel, Robert & Kraus, Alan & Zechner, Josef, 2001. "The Effect of Green Investment on Corporate Behavior," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 36(4), pages 431-449, December.
    3. Guo, Xin & Pang, Weiyan, 2025. "The impact of digital transformation on corporate ESG performance," Finance Research Letters, Elsevier, vol. 72(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ciciretti, Rocco & Dalò, Ambrogio & Dam, Lammertjan, 2023. "The contributions of betas versus characteristics to the ESG premium," Journal of Empirical Finance, Elsevier, vol. 71(C), pages 104-124.
    2. Ballester, Laura & González-Urteaga, Ana & Shen, Long, 2024. "Green bond issuance and credit risk: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 94(C).
    3. Thomas Kaspereit & Kerstin Lopatta, 2013. "The Value Relevance of SAM's Corporate Sustainability Ranking and GRI Sustainability Reporting in the European Stock Markets," ZenTra Working Papers in Transnational Studies 19 / 2013, ZenTra - Center for Transnational Studies, revised Oct 2013.
    4. Vanwalleghem, Dieter & Mirowska, Agata, 2020. "The investor that could and would: The effect of proactive personality on sustainable investment choice," Journal of Behavioral and Experimental Finance, Elsevier, vol. 26(C).
    5. Adachi-Sato, Meg, 2024. "Socially responsible investment: Ex-ante contracting or ex-post bargaining?," International Review of Economics & Finance, Elsevier, vol. 94(C).
    6. Renström, Thomas I. & Spataro, Luca & Marsiliani, Laura, 2019. "Optimal Taxation, Environment Quality, Socially Responsible Firms and Investors," International Review of Environmental and Resource Economics, now publishers, vol. 13(3-4), pages 339-373, September.
    7. Xiao, He, 2022. "Environmental regulation and firm capital structure dynamics," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 770-787.
    8. Forest L. Reinhardt & Robert N. Stavins & Richard H. K. Vietor, 2008. "Corporate Social Responsibility Through an Economic Lens," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 219-239, Summer.
    9. Ali, Mohsin & Azmi, Wajahat & Kowsalya, V. & Rizvi, Syed Aun R., 2023. "Interlinkages between stability, carbon emissions and the ESG disclosures: Global evidence from banking industry," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    10. Giglio, Stefano & Maggiori, Matteo & Stroebel, Johannes & Tan, Zhenhao & Utkus, Stephen & Xu, Xiao, 2025. "Four facts about ESG beliefs and investor portfolios," Journal of Financial Economics, Elsevier, vol. 164(C).
    11. Massimo Mariani & Fabio Pizzutilo & Alessandra Caragnano & Marianna Zito, 2021. "Does it pay to be environmentally responsible? Investigating the effect on the weighted average cost of capital: Environmental commitment and the cost of capital," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1854-1869, November.
    12. Krüger, Philipp, 2015. "Corporate goodness and shareholder wealth," Journal of Financial Economics, Elsevier, vol. 115(2), pages 304-329.
    13. Bai Xue & Zhuang Zhang & Pingli Li, 2020. "Corporate environmental performance, environmental management and firm risk," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 1074-1096, March.
    14. Jiancheng Shen & Chen Chen & Zheng Liu, 2023. "Does environmental investment pay off?—portfolio analyses of the E in ESG during political conflicts and public health crises," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 46(S1), pages 107-131, December.
    15. Stephen Bahadar & Muhammad Nadeem & Rashid Zaman, 2023. "Toxic chemical releases and idiosyncratic return volatility: A prospect theory perspective," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2109-2143, June.
    16. Stahl, Stefan, 2012. "Investitionsbewertung unter Berücksichtigung von Umweltschutz als eigenständigem Formalziel," Thuenen-Series of Applied Economic Theory 128, University of Rostock, Institute of Economics.
    17. Lars Hornuf & Gül Yüksel, 2022. "The Performance of Socially Responsible Investments: A Meta-Analysis," CESifo Working Paper Series 9724, CESifo.
    18. Satish Kumar & Dipasha Sharma & Sandeep Rao & Weng Marc Lim & Sachin Kumar Mangla, 2025. "Past, present, and future of sustainable finance: insights from big data analytics through machine learning of scholarly research," Annals of Operations Research, Springer, vol. 345(2), pages 1061-1104, February.
    19. Pástor, Ľuboš & Stambaugh, Robert F. & Taylor, Lucian A., 2021. "Sustainable investing in equilibrium," Journal of Financial Economics, Elsevier, vol. 142(2), pages 550-571.
    20. Iulie Aslaksen & Terje Synnestvedt, 2003. "Ethical investment and the incentives for corporate environmental protection and social responsibility," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 10(4), pages 212-223, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jrisks:v:13:y:2025:i:4:p:68-:d:1625516. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.